The best children’s benefit

Should savings made on the annual €2 billion cost of child benefit be used to pay for an extra year of free pre-school? Minister for Education, Ruairí Quinn has floated the idea, which has already won strong support from some of his cabinet colleagues. The case for making the change is compelling. As Mr Quinn pointed out at an ESRI conference on education this week: “Child benefit is about what is the best benefit you can give a child. That – particularly in relation to a child coming from a disadvantaged background – means levelling the playing field in the world of education.”

Unquestionably, early access to education can prove hugely beneficial and the success of the current, single-year free pre-school scheme can be measured by the take-up of places. Up to 95 per cent of eligible parents avail of the facility for their children. For the child, research studies have highlighted the educational and other benefits of the pre-school experience. For parents, there is also a huge financial saving in childcare costs, with average savings estimated at some €3,000 a year for participating families.

How much will this extra year cost? How will it be financed? And when might the proposal be implemented? As yet, much of the detail remains unclear. Indeed, Mr Quinn’s proposal has yet to be considered by Government, and the issue will undoubtedly be central to budget discussions in the months ahead. But what is evident is growing political, and most likely public, support for the idea; one that will prove popular in some quarters and controversial in others.

The challenge for the Government, if the Cabinet backs the proposal, will lie in deciding how to finance the extra year of free pre-school. Any savings made on the cost of child benefit, it is suggested, will not be used to reduce the fiscal deficit, but to pay for that extra pre-school year. Will this be done by taxing child benefit payments, or making these subject to a means test? At present, child benefit remains a universal tax-free payment that all families with children receive, rich or poor, regardless of their means.

Recent years have seen cuts in child benefit. But up to now, successive governments have resisted the idea of either taxing or means testing the benefit, or – as has happened in the UK this year – scrapping the payment altogether for higher-rate taxpayers. On grounds of social equity and given the weak state of the economy, a clear case can now be made for taking such a major step, whether by taxing or means testing child benefit payments, and with the proceeds used to pay for an extra year of pre-school for children. This can be done while still ensuring the most vulnerable, and those in greatest need of child benefit, are left no worse off as a result of such a change, and in a position to benefit from that extra year of free pre-school.